| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis
of Presentation On
February 7, 2024, the Company consummated the Business Combination and became a publicly-traded company and its financial statements
are now presented on a consolidated basis. Prior to the Business Combination, the Company’s historical financial statements were
prepared on a combined basis derived from DIH Cayman. In
connection with the Closing of the Business Combination and in accordance with the terms of the Business Combination Agreement, ATAK
agreed to waive the closing condition that the reorganization be completed prior to Closing. The Company has recast historical financial
statements filed in the registration statements to exclud e assets, liabilities and results of operations
of entities that are not controlled by the Company as of . While
the Company’s businesses have historically functioned together with the other businesses controlled
by DIH Cayman, the Company’s businesses are largely isolated and not dependent on corporate or other support functions. DIH Cayman
did not have significant corporate or operational activity and does not have shared services that it provides to its subsidiaries. The
Company considered allocations from the DIH Cayman and its subsidiaries but they are insignificant because of the organizational structure
such that the Company has been operating on a standalone basis historically. As
of September 30, 2024 and March 31, 2024, DIH Cayman remains the largest shareholder of the Company and continues to own 100 Note 13. The
condensed consolidated financial statements (the “financial statements”) have been prepared in accordance with United States
(“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the
information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, including
normal recurring adjustments, considered necessary for a fair statement of the Company’s financial position and operating results
have been included. All intercompany balances and transactions within the Company have been eliminated in the financial statements. Operating
results for the three and six months ended September 30, 2024 and 2023 are not necessarily indicative of the results that may be expected
for the fiscal year as a whole. The March 31, 2024 period presented on the Condensed Consolidated Balance Sheet was derived from audited
financial statements, but does not include all disclosures required by U.S. GAAP. The following tables and footnotes are presented in
thousands of U.S. dollars unless otherwise stated. These condensed consolidated financial statements should be read in conjunction with
the Company’s Annual Report on Form 10-K for the year ended March 31, 2024. Foreign
Currency Reporting The
functional currency for the Company’s non-U.S. subsidiaries is their local currency. The assets and liabilities of foreign subsidiaries
are translated into U.S. dollars using the exchange rate in effect as of the balance sheet date. Revenues and expenses are translated
at the average exchange rates for each respective reporting period. Adjustments resulting from translating local currency financial statements
into U.S. dollars are reflected in accumulated other comprehensive income (loss). Transactions
denominated in currencies other than the functional currency are remeasured based on the exchange rates at the time of the transaction.
Foreign currency gains and losses arising primarily from changes in exchange rates on foreign currency denominated intercompany transactions
and balances between foreign locations are recorded in the condensed consolidated statements of operations. Realized and unrealized gains
(losses) resulting from transactions conducted in foreign currencies for the (1,415) 271 $ 38 (418) Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated
financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management
in connection with the preparation of the accompanying condensed consolidated financial statements include the useful lives of long-lived
assets, inventory valuations, the allocation of transaction price among various performance obligations, valuation of securities, the
allowance for credit losses, the fair value of financial assets, liabilities, actuarial valuation of pensions and realizability of deferred
income tax asset or liabilities. Actual results could differ from those estimates. Concentration
of Credit Risk Financial
instruments that potentially subject the Company to credit risk primarily consists of cash and cash equivalents and accounts receivable.
The Company maintains its cash and cash equivalents with highly-rated financial institutions and limits the amount of credit exposure
to any one entity. We believe we do not have any significant credit risk on our cash and cash equivalents. For accounts receivable, the
Company is exposed to credit risk in the event of nonpayment by customers which is limited to the amounts recorded on the condensed consolidated
balance sheets. The risk associated with this concentration is mitigated by prepayment arrangements and our ongoing credit-review procedures
and letters of credit or payment prior to shipment. M ajor
customers are defined as those individually comprising more than 10 10 r comprised more than 10 15.9 16.6 Accounting
Pronouncements Recently Adopted In
August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in
an Entity’s Own Equity Recent
Accounting Pronouncements Not Yet Adopted In
November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Update
No. 2023-07 requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the Chief
operating decision maker (“CODM”) and included within each reported measure of segment profit or loss in addition to disclosure
of amounts for other segment items and a description of its composition. Update No. 2023-07 is effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the impact
of adopting ASU 2023-07. In
December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures
primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to
improve the effectiveness of income tax disclosures. The provisions of ASU 2023-09 are effective for annual periods beginning after December
15, 2024, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2023-09. In
November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic
220-40): Disaggregation of Income Statement Expenses, which requires more detailed disclosures of certain categories of expenses such
as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented
on the face of the income statement. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim
reporting periods beginning after December 15, 2027. Early adoption is permitted. Companies have the option to apply the guidance either
on a retrospective or prospective basis, and early adoption is permitted. The Company is currently evaluating the impact this standard
will have on its financial statement presentation and disclosures. | 2. Summary of Significant Accounting Policies Basis
of Presentation On
February 7, 2024, the Company consummated the Business Combination and became a publicly-traded company and its financial statements
are now presented on a consolidated basis. Prior to the Business Combination, the Company’s historical financial statements were
prepared on a combined basis derived from DIH Cayman in the registration statement. In
connection with the Closing of the Business Combination and in accordance with the terms of the Business Combination Agreement, ATAK
agreed to waive the closing condition that the reorganization be completed prior to Closing. The Company has recast historical financial
statements filed in the registration statements to exclude assets, liabilities and results of operations of entities that are not controlled
by the Company as of March 31, 2024. Control exists when the Company has the power, directly and indirectly, to govern the financial
and operating policies of an entity and be exposed to the variable returns from its activities. The financial statements for all periods
presented, including historical periods prior to February 7, 2024, are now referred to as “Consolidated financial statements”
and have been prepared in conformity with U.S. GAAP. While
the Company’s businesses have historically functioned together with the other businesses controlled by DIH Cayman, the Company’s
businesses are largely isolated and not dependent on corporate or other support functions. DIH Cayman did not have significant corporate
or operational activity and does not have shared services that it provides to its subsidiaries. The Company considered allocations from
the DIH Cayman and its subsidiaries but they are insignificant because of the organizational structure such that the Company has been
operating on a standalone basis historically. As
of March 31, 2023, legacy DIH and DIH International (“DIH Hong Kong”) were wholly owned subsidiaries of DIH Cayman. As of
March 31, 2024, DIH Cayman remains the largest shareholder of the Company and continues to own 100 All
intercompany balances, transactions and profits are eliminated in consolidation. Foreign
Currency Reporting The
functional currency for the Company’s non-U.S. subsidiaries is their local currency. The assets and liabilities of foreign subsidiaries
are translated into U.S. dollars using the exchange rate in effect as of the balance sheet date. Revenues and expenses are translated
at the average exchange rates for each respective reporting period. Adjustments resulting from translating local currency financial statements
into U.S. dollars are reflected in accumulated other comprehensive loss in equity (deficit). Transactions
denominated in currencies other than the functional currency are remeasured based on the exchange rates at the time of the transaction.
Foreign currency gains and losses arising primarily from changes in exchange rates on foreign currency denominated intercompany transactions
and balances between foreign locations are recorded in the consolidated statements of operations. Realized and unrealized gains (losses)
resulting from transactions conducted in foreign currencies for the years ended March 31, 2024 and 2023 were $ (376) 584 Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management in
connection with the preparation of the accompanying consolidated financial statements include the useful lives of long-lived assets,
inventory valuations, the allocation of transaction price among various performance obligations, valuation of securities, the allowance
for credit losses, the fair value of financial assets, liabilities, actuarial valuation of pensions and realizability of deferred income
tax asset or liabilities. Actual results could differ from those estimates. Concentration
of Credit Risk Financial
instruments that potentially subject the Company to credit risk primarily consists of cash and cash equivalents and accounts receivable.
The Company maintains its cash and cash equivalents with highly-rated financial institutions and limits the amount of credit exposure
to any one entity. We believe we do not have any significant credit risk on our cash and cash equivalents. For accounts receivable, the
Company is exposed to credit risk in the event of nonpayment by customers which is limited to the amounts recorded on the consolidated
balance sheets. The risk associated with this concentration is mitigated by prepayment arrangement and our ongoing credit-review procedures
and letters of credit or payment prior to shipment. Major
customers are defined as those individually comprising more than 10 10 13.9 10 12.0 Revenue
Recognition Sales
are recognized as the performance obligations to deliver products or services are satisfied and are recorded based on the amount of consideration
the Company expects to receive in exchange for satisfying the performance obligations. The Company’s sales are recognized primarily
when it transfers control to the customer, which can be on the date of shipment of the product, the date of receipt of the product by
the customer or upon completion of any required product installation service depending on the terms of the sales contracts and product
shipping terms. If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation
based upon a relative standalone selling price and recognizes the related revenue when or as control of each individual performance obligation
is transferred to customers. The Company does not assess whether promised goods or services are performance obligations if they are immaterial
in the context of the contract with the customer. Sales represent the amount of consideration the Company expects to receive from customers
in exchange for transferring products and services. Net sales exclude sales tax, value added and other taxes the Company collects from
customers. Sales for extended warranties are deferred and recognized as revenue on a straight-line basis over the warranty period. The
Company extends terms of payment to its customers based on commercially reasonable terms for the markets of its customers, while also
considering their credit quality. Shipping and handling costs charged to customers are included in net sales. Certain
of the Company’s products are sold through distributors and third-party sales representatives under standard agreements whereby
distributors purchase products from the Company and resell them to customers. These arrangements do not provide stock rotation or price
protection rights and do not contain extended payment terms. Rights of return are limited to repair or replacement of delivered products
that are defective or fail to meet the Company’s published specifications. Provisions for these warranty costs are recognized in
the same period that the related revenue is recorded similar to other assurance-type warranties. Deferred
revenue primarily represents service contracts and equipment maintenance, for which consideration is received in advance of when service
for the device or equipment is provided. Revenue related to services contracts and equipment maintenance is recognized over the service
period as time elapses. Revenues related to products containing an installation clause, are recognized once the item is confirmed installed.
See Note 3 for further information on the Company’s deferred revenue balances and remaining performance obligations. Revenues
exclude any taxes that the Company collects from customers and remits to tax authorities. Amounts billed to the customer for shipping
and handling are included in revenue, while the related shipping and handling costs are reflected in cost of sales in the period in which
revenue is recognized. The Company has elected a practical expedient under ASC 606 that allows for shipping and handling activities that
occur after the customer has obtained control of a good to be accounted for as a fulfillment cost. The Company does not adjust the promised
amount of consideration for the effects of a significant financing component, if, at contract inception, the Company expects the period
between the time when the Company transfers a promised good or service to the customer and the time when the customer pays for that good
or service will be one year or less. The
Company exercises judgment in determining the timing of revenue by analyzing the point in time or the period over which the customer
has the ability to direct the use of and obtain substantially all of the remaining benefits of the performance obligation. The Company
primarily recognizes revenue from sales of products at the point in time that the customer obtains control, which is typically based
upon the terms of delivery. The billing terms for these point-in time product contracts generally coincide with delivery to the customer
and customer acceptance. When the Company receives customer advances, these are recognized as advance payments from customers in the
consolidated balance sheet. The Company recognizes revenue from the sale of certain service contracts over time on a ratable basis consistent
with the nature, timing and extent of services, which primarily relate to extended warranties. Our billing terms for these contracts
vary and can occur in advance of or following the service period of service. The differences between the timing of our revenue recognized
and customer billings (based on contractual terms) result in changes to our contract asset or contract liability positions. Warranties The
Company generally provides warranties for its products from manufacturing defects on a limited basis for a period of one year after purchase,
but also has extended warranties that are separately priced for periods of up to four years. During the term of the warranty, if the
device fails to operate properly from defects in materials and workmanship, the Company will fix or replace the defective product. If
the customer does not allow the required scheduled maintenance of the product during the extended warranty contract terms, the contract
is canceled. The
company estimates the costs that it may incur under its warranty programs based on the number of units sold, historical and anticipated
rates of warranty claims, and cost per claim, and records a liability equal to these estimated costs in cost of sales. The company assesses
the adequacy of its recorded warranty liabilities on a quarterly basis and adjusts these amounts as necessary. A
reconciliation of the changes in manufacturing warranty obligation is as follows: Reconciliation
of Changes in Manufacturing Warranty Obligation
2024 2023
Years Ended March 31,
2024 2023
Balance as of beginning of period $ 973 $ 836
Current-year provisions 1,139 973
Reductions for settlements (973 ) (836 )
Adjustments related to changes in estimates (626 ) -
Balance as of end of period $ 513 $ 973 Cost
of Sales Cost
of sales is comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation
expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost
of sales also includes the cost to distribute products to customers, inbound freight costs, warehousing costs and other shipping and
handling activity, excluding shipping and handling to customers. Cost
of service is comprised primarily of employee wages, benefits and related personnel expenses of our technical support team, our professional
consulting personnel, and our training teams. It also includes costs related to travel and other associated expenses, as well as material
and supplies consumed in providing services. Selling,
General and Administrative Expenses Selling,
general and administrative expense is comprised personnel related expenses for DIH’s sales and corporate functions and expenses
for outside professional services as well as expenses for facilities, overhead, depreciation, amortization, and marketing costs. Research
and Development Research
and development costs are expensed when incurred except for production stage software research and development costs. Research and development
costs include costs of research, engineering, and technical activities to develop a new product or service or make significant improvement
to an existing product or manufacturing process. Research and development costs also include pre-approval regulatory and clinical trial
expenses. Accounts
Receivable, net Accounts
receivable, net in the accompanying consolidated balance sheets are presented net of allowances for credit losses. The Company performs
evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The standard terms
and conditions include provisions of prepayments of up to 100% of the contract value prior to shipping the product to the customer. The
Company evaluates the collectability of its accounts receivable based upon several factors, including historical experience, the likelihood
of payment from its customers, and any other known specific factors associated with its customers. Allowances are made based upon a specific
review of aged invoices as well as a review of the overall quality and age of those invoices not specifically reviewed. Each period,
the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets.
Uncollectible accounts are written-off against the allowance when it is deemed that a customer account is uncollectible. The
decrease in Accounts Receivable related to the application of the Current Expected Credit Loss (CECL) methodology is primarily due to
the more forward-looking and comprehensive approach to estimating credit losses under CECL compared to the previous incurred loss model. The
following table presents the allowance for credit loss and the changes therein: Summary
of Allowance for Credit Loss and Changes
Balance as of March 31, 2023 $ 1,683
CECL implementation (547 )
Recoveries (704 )
Credit loss expense 279
Write-offs (44 )
Balance as of March 31, 2024 $ 667 Fair
Value Measurements The
Company uses any of three valuation approaches to measure fair value: the market approach, the income approach, and the cost approach
in determining the appropriate valuation methodologies based on the nature of the asset or liability being measured and the reliability
of the inputs used in arriving at fair value. The
Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, long-term
related party notes payable, accrued expenses and other current liabilities, and accrued employee benefits. The carrying amounts of cash
and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, and accrued employee benefits
are representative of their respective fair values due to the short-term maturity of these instruments. The Company’s related party
notes payable are due within two years and is classified as noncurrent in the consolidated balance sheet and the Company makes regular
prepayments historically prior to the due date. Therefore the Company’s related party notes payable’s carrying value approximate
the fair value due to the remaining duration. Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. These fair value measurements incorporate nonperformance risk (i.e., the risk that an obligation
will not be fulfilled). In measuring fair value, the Company reflects the impact of credit risk on liabilities, as well as any collateral.
The Company also considers the credit standing of counterparties in measuring the fair value of assets. The
Company follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”) for non-financial assets and liabilities measured
on a non-recurring basis such as on a potential impairment loss related to long-lived assets and assets and liabilities acquired in a
business combination. The
framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The
three levels of the valuation hierarchy are defined as follows:
● Level
1 – Observable inputs such as quoted prices in active markets at the measurement date
for identical, unrestricted assets or liabilities.
● Level
2 – Other inputs that are observable directly or indirectly such as quoted prices in
markets that are not active, or inputs which are observable, either directly or indirectly,
for substantially the full term of the asset or liability.
● Level
3 – Unobservable inputs for which there is little or no market data and which the Company
makes its own assumptions about how market participants would price the assets and liabilities. A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment and considers factors specific to the asset or liability. Cash
and Cash Equivalents The
Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months
or less at the time of purchase to be cash equivalents. Inventories,
net Inventories
are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost basis. The Company reduces the
carrying value of inventories for items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology
developments, or other economic factors. These reserves are included within the raw materials and spare parts, work in process, and finished
and semi-finished goods accounts. Inventory
costs for manufactured products consist primarily of direct labor and materials (including salary and fringe benefits, raw materials,
and supplies) and indirect costs (including allocations of costs from departments that support manufacturing activities and facility
allocations). The allocation of fixed production overhead costs is based on actual production levels, to the extent that they are within
the range of the facility’s normal capacity. Inventory costs for products purchased for resale or manufactured under contract consist
primarily of the purchase cost, freight-in charges, and indirect costs as appropriate. The
Company regularly evaluates its inventory to determine if the costs are appropriately recorded at the lower of cost or market value.
Lower of cost or market value write-downs are recorded if the book value exceeds the estimated net realizable value of the inventory,
based on recent sales prices at the time of the evaluation. Property
and Equipment, Net Property
and equipment are stated at cost and depreciated over the useful lives of the assets using the straight- line method except for leasehold
improvements which are depreciated over the shorter of the useful life or the lease term. Useful lives by asset category are as follows: Schedule
of Property and Equipment, Useful Life
Years
Computer
software and hardware 3
Machinery
and equipment 5 10
Vehicles 5
Furniture
and fixtures 3 5
Property plant and equipment useful life 3 5
Leasehold
improvements Shorter
of remaining lease term or estimated useful life Additions
and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as
incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts,
and any resulting gain or loss are reflected in the accompanying consolidated statements of operations for the period. Capitalized
software, net Software
development costs are capitalized in accordance with ASC 350-40, Internal Use Software Accounting and Capitalization. Software development
costs related to preliminary project activities and post-implementation and maintenance activities are expensed as incurred. Direct costs
related to application development activities that are probable to result in additional functionality are capitalized. Capitalized software
development costs are amortized using the straight-line amortization method over the estimated useful life of the applicable software,
5 Other
intangible assets, net Costs
associated with the acquisition of patent and technology related intangibles are capitalized and amortized using the straight-line method
over the estimated useful life of 10 years Demonstration
Units The
Company utilizes product demonstration units that are used to display the product’s capabilities and demonstrate how it works to
potential customers or for other appropriate applications. The Company records and carries the cost of these demonstration units as either
inventory or property and equipment depending on several factors including the nature of the product, length of time the units are in
the field prior to being sold, and whether management’s intent is to sell the units. If the product demonstration units are classified
as property and equipment, the balance will be carried net of accumulated depreciation. Impairment
of Long-Lived Assets, including intangible assets Long-lived
assets include acquired property and equipment, subject to amortization. The Company evaluates the recoverability of long-lived assets
for possible impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.
Such events and changes may include significant changes in performance relative to expected operating results, significant changes in
asset use, significant negative industry or economic trends, and changes in the Company’s business strategy. Recoverability is
measured by a comparison of the carrying amount of an asset or asset group to the undiscounted future cash flows expected to be generated
by the asset or asset group. When required, impairment losses on assets to be held and used are recognized based on the excess of the
asset’s carrying amount over the fair value of the asset, while long-lived assets to be disposed of are reported at the lower of
carrying amount or fair value less cost to sell. Capitalized
software costs and other intangible assets are tested for impairment whenever events or changes in circumstances that could impact recoverability
occur. For
the years ended March 31, 2024 and 2023, the Company did not record any impairment losses. Leases The
Company adopted the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
842 on April 1, 2021 using the modified retrospective approach and, as a result, did not restate prior periods. At the commencement of
a contract, the Company determines if a contract meets the definition of a lease. A lease is a contract, or part of a contract, that
conveys the right to control the use of identified property or equipment (an identified asset) for a period of time in exchange for consideration.
The Company determines if the contract conveys the right to control the use of an identified asset for a period of time. The Company
assesses throughout the period of use whether the Company has the following: (1) the right to obtain substantially all the economic benefits
from use of the identified asset, and (2) the right to direct the use of the identified asset. This determination is reassessed if the
terms of the contract are changed. Leases are classified as operating leases based on the terms of the lease agreement and certain characteristics
of the identified asset. Right-of-use assets and lease liabilities are recognized at lease commencement date based on the present value
of the minimum future lease payments. If the interest rate implicit in the Company’s leases is not readily determinable, in determining
the weighted-average discount rate used to calculate the net present value of lease payments, the Company utilizes an estimate of its
incremental borrowing rate. The
Company leases office space, vehicles and office equipment under operating leases. The Company has elected several practical expedients
permitted under ASC 842. The Company has elected not to recognize right-of-use assets and liability for leases with a term of 12 months
or less unless the lease includes an option to renew or purchase the underlying asset that are reasonably certain to be exercised Most
real estate leases contain clauses for renewal at the Company’s option with renewal terms that generally extend the lease term
from six months to five years. Certain lease agreements contain options to purchase the leased property and options to terminate the
lease. Payments to be made in option periods are recognized as part of the right-of-use lease assets and lease liabilities when it is
reasonably certain that the option to extend the lease will be exercised or the option to terminate the lease will not be exercised or
is not at the Company’s option. The Company determines whether the reasonably certain threshold is met by considering all relevant
factors, including company-specific plans and economic outlook. Contingencies The
Company records a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probable,
and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the
range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known
or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. Legal costs incurred in connection with
loss contingencies are expensed as incurred. Public
and Private Placement Warrants The
Company assumed 20,200,000 6,470,000 two one 11.50 The
Public Warrants are publicly traded and are exercisable for cash unless certain conditions occur, such as the failure to have an effective
registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions, at which time
the warrants may be cashless exercised at the option of the Company. The Private Placement Warrants have terms and provisions that are
identical to the Public Warrants except that the Private Placement Warrants holder can exercise their Private Placement Warrants for
cash or on a cashless basis when the Company call the warrants for redemption at the option of private placement warrant holders and
that the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination. The
Company evaluated the Public and Private Placement Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own
Equity (“ASC 815-40”), and concluded they meet the criteria for equity classification as they are considered to be indexed
to the Company’s own stock. Since the Public and Private Placement Warrants met the criteria for equity classification upon the
consummation of the Business Combination, the Company recorded these warrants in additional paid-in capital as part of the Business Combination. Segment
Information The
Company operates in one operating and reportable segment. Operating segments are defined as components of an enterprise for which separate
financial information is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate
resources and assess performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews revenue at
the geographic region level, and gross profit, operating income and expenses, and net income at the Company wide level to allocate resources
and assess the Company’s overall performance. Accordingly, decision-making regarding the Company’s overall operating performance
and allocation of Company resources is assessed on an aggregate basis. Defined
Benefit Plan The
Company sponsors defined a benefit pension plan (“pension plan”) for certain employees and retirees. The Company recognizes
the funded status of its pension plan on the consolidated balance sheets based on the year-end measurements of plan assets and benefit
obligations. When the fair value of plan assets is in excess of the plan benefit obligations, the amounts are reported in other current
assets and other assets. When the fair value of plan benefit obligations is in excess of plan assets, the amounts are reported in accrued
expenses and other long-term liabilities based on the amount by which the actuarial present value of benefits payable in the next twelve
months included in the benefit obligation exceeds the fair value of plan assets. Net
periodic pension benefit cost/(income) is recorded in the consolidated statements of operations and includes service cost, interest cost,
expected return on plan assets, amortization of prior service costs/(credits) and (gains) losses previously recognized as a component
of other comprehensive income (loss) and amortization of the net transition asset remaining in accumulated other comprehensive income
(loss). The service cost component of net benefit cost is recorded in selling, general and administrative in the consolidated statements
of operations. The other components of net benefit cost are presented separately from service cost within other income (expense) in the
consolidated statements of operations. (Gains)
losses and prior service costs/(credits) are recognized as a component of other comprehensive income (loss) in the consolidated statements
of comprehensive loss as they arise. Those (gains) losses and prior service costs (credits) are subsequently recognized as a component
of net periodic cost (income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains) losses
arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior
service costs (credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. The
measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the company’s
management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age, and years
of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation
increases, interest crediting rates and mortality rates. See Note 14 for further information. Acquisitions In
conjunction with each acquisition transaction, the Company determines if the acquisition meets the criteria to be accounted for as a
business combination set forth in ASC 805, Business Combinations (“ASC 805”). The Company evaluates the acquisition to assess
whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test
to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group
of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not
met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create
outputs which would meet the definition of a business. If
the transaction is determined not to be a business combination, it is accounted for as an asset acquisition. For asset acquisitions,
the Company allocates the purchase price and other related costs incurred to the assets acquired and liabilities assumed based on recent
independent appraisals and management judgment. If
the acquisition is determined to be a business |
